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When is the Right Timing for a Mediation?

When is the Right Timing for a Mediation?

Source:
ABTL report

Date:
2013

Mediation has become so embedded in the litigation
process that it is typically no longer a question of if
the case will go to mediation, but when. The California
courts have repeatedly recognized “strong legislative
policy” in favor of alternatives to court adjudication.
The California legislature has acknowledged the
advantages of mediation — simplicity, economy,
privacy, greater opportunity for direct participation of
the parties, timely resolution, certainty of outcome, and
finality. Clients, particularly cost-conscious in-house
counsel, are increasingly more sophisticated in their
approach to mediation and expect their attorneys to be
as well. Suggesting mediation these days is not a sign
of weakness, but simply a recognition of what the court
will expect, or at least encourage.
Concepts about negotiation have also evolved to
focus on non-economic interests as well as economic
solutions to disputes. This approach has made its way
into the MBA programs, law schools, management
trainings and even trainings for insurance adjusters.
While haggling and bazaar-style bargaining over money
(or other quantifiable factors, such as real estate,
licenses, products or time) are enough for some people
and organizations, other experienced negotiators and
neutrals will consider a broader range of interests and
explore the possibility of a resolution that will expand
the “fixed pie.”
Timing, however, is key. Mediation should not be about
identifying as reliably as possible the best settlement
terms available at the time of the mediation rather the
mediation should be timed to get the best settlement
terms. “The right offer at the wrong time is the wrong
offer.” This article explores some of the considerations
involved in choosing the timing of the mediation
deliberately and strategically, and preparing for the
right time when it comes.
PLANNING MEDIATION IN THE CONTEXT OF THE LITIGATION
In planning litigation, trial attorneys often create
calendaring systems to make sure no deadlines are
missed or details are overlooked. Making the effort to
consider mediation at different points in the litigation
plan is just as important. The critical path to success in
mediation should take as much focus and discipline in
planning as trial strategy. A very patient golf instructor
once said to me “If we don’t aim it’s a waste of time.”
Like most things in the litigation process, it is usually
not a neat sequential linear path to a mediation event.
The challenge is to be as little surprised as possible,
to be able to respond to the unexpected, to minimize
potential setbacks and to take advantage of openings.
An effective calendaring system could include points
that trigger consideration of mediation before the next
litigation event.
For instance, is a motion for summary judgment
anticipated? Is it likely that its greatest impact on a
mediation will be before it is filed, after it is filed but
not ruled on, or only after a ruling if it does not dispose
of all the issues? Should a mediation session occur
before or after making an offer of judgment under CCP
§998 or FRCP 68? An offer of judgment ups the ante by
shifting certain “costs” to the offeree if they do not get
a more favorable verdict. In some cases, increasing the
litigation risks before a mediation may be the right call
— but it may cause the other side to view the offered
number as a “step” in the negotiation dance rather
than as the offeror’s “bottom line.”
Another timing consideration is when to begin the
mediation. While the marathon one-day session is the
traditional paradigm, there may also be a mediation
process that includes shorter sessions at different
1.800.352.JAMS | www.jamsadr.com
This article was originally published by ABTL Report
and is reprinted with their permission.
WHEN IS THE RIGHT
TIMING FOR A MEDIATION
By Hon. Rebecca Westerfield (Ret.)The Right Timing for a Mediation | Page 2
points. In complex cases this can allow for different
sessions with different participants, but sequencing
multiple individual claims or fractionating issues may
be efficacious even in simpler cases. And, as discussed
below, a sequenced mediation can be used to help
manage the discovery process.
“BIGGER-PICTURE” TIMING CONCERNS
Determining the right timing for mediation also requires
knowing about issues external to the immediate dispute
that can impact resolution. Is there an initial public
offering on the horizon, a financial obligation coming
due, an anticipated announcement by a regulatory
agency, a change in tax laws, or a pending appellate
court case that addresses the subject matter of the
lawsuit or a key issue in the litigation? The attorney
must appreciate the context of the dispute and know
the client’s overarching needs to satisfy them.
There are disputes in which the parties may have a
higher interest in preserving an existing beneficial
business or professional relationship — unexpired
service agreement, software license, supply contract,
an ongoing business, or relationships with non-
party entities such as customers. A client may have
objectives that are unobtainable through the litigation
— renegotiated contracts, buy-outs, exchange of
property, a release that goes beyond the litigated matter.
In these cases, the mediation should occur when the
options can be explored fully, before the possibility of
productive discussions is eroded by the demands of
adversarial litigation. In a high-stakes dispute involving
highly technical or scientific issues, the parties’
priority may be retaining control of the outcome. Early
mediation in which an independent expert is engaged
to assist the mediator before litigation begins may be
advisable.
MEDIATION AND DISCOVERY
In some cases, it is helpful to involve a neutral even
before the case is ready for mediation, particularly to
help facilitate a reasonable and cost-effective discovery
process. In a recent construction case, a half-day
session was held in which experts on both sides
shared information and the parties devised a plan
for moving forward towards settlement discussions.
Parties can work with a mediator to design a process
for exchange of information reducing discovery costs
and maintaining confidentiality under the mediation
privilege. A mediator can monitor the case to help
the parties determine the opportune time to have
meaningful settlement discussions.
The conundrum of discovery is that attorneys cannot
assess settlement as an alternative to a trial or arbitration
outcome without reliable information, but formal
discovery processes often involve considerable costs
and delays without any guarantee about the usefulness
of information obtained. While certainly some discovery
battles may be necessary, costly discovery disputes
can lead to runaway costs, heightened distrust and
sometimes irrational attachment to the litigation.
There are a couple of dynamics worth noting that
needlessly escalate the conflicts around discovery that
a mediator involved at an early stage will try to allay. One
is sunken cost fallacy, or the tendency to “throw good
money after bad” in the belief that this will improve
the ultimate outcome. Past attorney’s fees and costs
should not influence judgments about future decisions
(especially when they cannot be recouped through a
statutory or contractual fee provision). In reality, past
expenses often do create an irrational commitment
to investing more resources into a case even when it
may not make economic sense. Another destructive
dynamic is fundamental attribution error, the tendency
to attribute an understandable cause to one’s own
actions and to attribute that same action by another
to being unreasonable. Two common examples: “My
discovery requests are necessary to evaluate the
claim and assess risk. Your discovery demands are a
tactic in a costly war of attrition.” Or “Your resistance
to discovery is because you are hiding something. My
resistance is because I am trying to be prudent about
costs.” Prolonged litigation is likely to exacerbate these
dynamics, while a well-timed mediation can help
ameliorate them.
The mediator can insure that there has been a timely
exchange of data and information that will make
a mediation session more likely to succeed, while
providing confidentiality for sensitive information
through the mediation privilege. For example, parties
may need revenue information and financial analysis
to evaluate a claim of damages. Or, if a defendant is
going to raise an argument about financial ability to
pay, credible, current financial statements ought to be
available before the mediation session (and before the
plaintiffs’ expectations are fully developed) if they are
to have any significant impact.
COVERAGE CONSIDERATIONS
Insured matters may require special consideration of
mediation timing. A claim may trigger more than one
policy. If the case involves continuous progressive The Right Timing for a Mediation | Page 3
damages, several policies covering different years
may be in play. Disputes may arise between excess
and primary carriers, or among different lawyers of
excess carriers. And a single claim or incident may
trigger different types of policies, such as a commercial
general liability policy and professional liability policy.
A policyholder (and, in most cases, a party suing the
policyholder) will want to ensure that all potentially
exposed carriers are on notice of a claim. Disputes
among different carriers should be identified before
mediation, and either resolved or attended to so that
everyone knows who will participate in the mediation.
It can be extremely frustrating and wasteful when a
defending carrier comes to mediation and refuses to
grant or use its settlement authority because of the
absence of another carrier. Time spent on allocation
and contribution issues among a defendants’ carriers
can antagonize and rankle plaintiffs who expect the
mediation to focus on the underlying claims, making it
more difficult to bring the case to closure. A mediator
who is engaged early can assist the parties in addressing
these issues, in reaching agreement as to who will
participate before the mediation takes place, or in
determining how to resolve the underlying case while
leaving contribution issues for another day. In some
cases, a “pre-mediation mediation” among multiple
carriers is helpful, either with the mediator that will
handle the underlying or with a different mediator if the
carriers do now want the mediator in the “main event”
to know the amount potentially available to settle the
underlying claim.
Coverage issues are also often complex and can involve
complicated factual determinations or policy language
untested by the courts. A pre-mediation mediation of
coverage can avoid the chewing up of time during the
mediation of the underlying case resulting in inadequate
time to reach settlement. Recently I was involved in
a dualtracked, parallel mediation in which I mediated
the coverage dispute and another neutral mediated
the underlying case. The corporate policyholder knew
it would be making some contribution to the settlement
and having the dual processes at the same time allowed
it to assess its exposure and ability to pay.
Timing considerations will matter even when there are
no coverage or contribution issues. A case is not “ready
for mediation” until the policyholder’s counsel makes
absolutely sure that all information requests from
the carrier have been addressed and that the carrier
has had all it reasonably needs to evaluate the case.
Policyholder’s counsel should also know how much
time a claims representative needs to obtain settlement
authority — and, since the answer to that question
may depend on the amount sought, plaintiffs’ counsel
should consider setting forth a demand well in advance
of the mediation to allow the carrier time to work
through the process of obtaining settlement authority.
Making a demand for the first time in a mediation brief
a few days before the mediation session is not helpful
if the plaintiff wants an insurance carrier to take the
demand seriously and evaluate it fully.
GETTING TO RESOLUTION
To bring a dispute to full closure, all necessary parties
must be engaged. How or when will all identified
plaintiffs be available? Are all the possible defendants
known? Time is not right for mediation if there is
an indispensable party absent from the table. In a
construction matter, for example, is the architect, the
engineer, a major subcontractor in addition to the
general contractor available and ready to participate?
Is there an indemnification provision that requires the
consent to settle and involvement of a third party? Is
the indemnitor ready to participate and if not, what
processes are needed to get its involvement? These
questions should not be afterthoughts in scheduling a
mediation session.
A party can be engaged and ready for mediation,
however, even if the party does not feel ready to settle. A
party may be too emotionally embroiled in the conflict,
too intimidated by the situation, or too confident in its
own position. Working through these issues with the
parties is often what mediators are expected to do. In
some cases, the parties’ deposition must occur first, to
allow counsel to obtain necessary facts but also to give
the parties the chance to tell their stories or to get a
“taste” of what trial may be like. But party-depositions
can harden positions and exacerbate animosity as well.
Counsel simply needs to consider the value of such
depositions in the timing of the mediation.
Counsel also need to be sure they give mediators
the tools that they need. Lawyers and their clients
have the right to expect a mediator to be thoroughly
prepared for a mediation — to understand the legal
arguments, to be knowledgeable about the central
undisputed facts, to be appreciative of the different
perspectives of disputed facts, to be skilled at handling
a wide variety of personalities and emotions. But even
the best mediators are hamstrung if they do not get
information in a timely manner. The scheduling of a
mediation should include a pre-mediation discussion The Right Timing for a Mediation | Page 4
about how to ensure a productive session, including
when information should be provided, the type of
presentations needed or wanted, the use of joint and
private caucuses, the decision-makers who should be
available, and whether any additional persons (such as
a party’s tax advisor or an accounting expert) should be
present or on call.
At the end of the day , some cases simply need to be tried.
After all that is what the members of this Association
of Business Trial Lawyers do well. It is also why ABTL
and the private ADR sector have a responsibility to
vigorously support a strong and independent judiciary
and an adequately funded public court system. But
a case should be tried for the right reasons, and not
because the players did not consider when and how
they could use the timing of the mediation process to
its best effect.
Rebecca Westerfield is a founding member of JAMS
and has been a full time neutral based in Northern
California for over twenty years.
Email: rwesterfield@jamsadr.com

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